Interim Results

30 September 2014

PeerTV PLC

("PeerTV" or the "Company")

Interim Results

PeerTV plc (AIM:PTV), a provider of technology solutions for the OTT (TV over the internet) market, and PCB (printed circuit board) today announces its unaudited results for the six months ending 30 June 2014:

Key Developments

· Consolidated turnover of $793,000 (H1 2013: $1,274,000) and total comprehensive loss of $2,025,000 (H1 2013: $1,101,000).

· Operating loss for the period was $1,530,000 compared to $477,000 in the same period in 2013. Financial charges for the period totalled $1,120,000 compared to $935,000 in the same period in 2013.

Peer TV

· R&D team continued to focus on supporting Kartina GmbH ("Kartina") the main customer. Android based set top boxes supplied during 2013 were launched commercially by the customer in January 2014 and were sold successfully, with a reported high level of customer satisfaction.

· Expected reorders were delayed by Kartina's decision to upgrade its network to the newer H265 HEV (High Efficiency Video Coding) technology. In September 2014, the development of a H265 set top box was completed and presented to the customer resulting in an order worth about $1.2 million conditional on satisfactory testing in a maximum period of two months.

· Management believe that the new H265 box provides PeerTV with a clear competitive advantage.

· In February 2014, an order was received from PolskyTV a new customer targeting the Polish-speaking market. Following the necessary customisation and delays due to amendments to the framework agreement, the initial 1,000 units were delivered in August 2014 and are currently being launched to the Polish market in the UK. Further orders are expected for delivery by the end of 2014 under the framework agreement.

· Pressures on working capital have prevented PeerTV from supporting more customers and generally limited marketing activities. Each sales lead requires significant support from the R&D team.

Digitek

Sales in the first six months of 2014 were at a similar level to the same period in 2013. In the period the strategy was to:

· Maintain and expand Digitek's traditional core business of SMT production.

· Exploit its expertise across a wide range of product categories to offer major customers complete products designed to meet their specific needs and to operate as a direct supplier rather than a subcontractor, thereby achieving higher margins.

Pressures on working capital forced Digitek to focus almost exclusively on assembly only projects. At least one major customer was lost as a result of the inability to supply full turnkey due to lack of credit capacity to finance the purchase of components. A joint venture with a main component supplier stalled as a result of the unexpected death of the CEO and owner of the JV components business.

In May 2014 Digitek received an order valued at $6.3 million for the supply of Printed Circuit Boards for smart electric meters, to an Israeli company for subsequent export. The customer has received delivery of a first shipment of the products. However, confirmation of the necessary approvals from the local utility, necessary to start the mass production stage of the order, have so far not been received and it cannot be forecast with any certainty when the mass production will commence.

Post Period Highlights

· As stated above, PeerTV presented the new H265 set top box to Kartina and secured a conditional order. It also attended the IBC 2014 major trade exhibition in Amsterdam in September 2014 where the new product was demonstrated, generating several potential sales leads.

· Digitek sales in the third quarter of 2014 have increased compared to the first two quarters of 2014, However, the sales performance has fallen short of expectations, particularly during the months June to August 2014 as a result of various factors, including:a) the hostilities in Israel in July and August, which had a significant impact on performance. Production was disrupted on several occasions and many customers decided to delay orders pending an end to the conflict; b) the Company continued to suffer from a lack of working capital, making it very difficult to bid on larger turnkey projects. c) the delay in moving to the mass production stage of the major order.

· Digitek has ordered a new SMT production line which is scheduled to become operational during October 2014. It has the potential to more than double Digitek's production capacity. Its advanced technology will enable Digitek to support larger customers who expect state of the art production facilities.

· In July 2014 the Company raised £210,000 before expenses through a placing of 42,000,000 new ordinary shares of 0.5 pence each at a price of 0.5 pence per share. In addition the Company entered into an agreement with YA Global Master SPV Ltd to provide an equity facility of up to £1.5 million under the terms of a Standby Equity Distribution Agreement ("SEDA"). Up to now it has not been possible to utilise the SEDA facility due to the Company's share price.

· In September 2014 an Extraordinary General Meeting was held at which it was resolved that the Company reorganise its share capital such that its existing Ordinary Shares have a lower nominal value. This was achieved by a subdivision of each existing Ordinary Share into one ordinary share of 0.05 pence each and one subordinated share of 0.45 pence each.

· Also in September 2014 the Company signed an agreement in respect of a £200,000 revolving line of credit with CSS Alpha (BVI) Ltd (the "Facility") comprising Debtor Financing and Purchase Order Financing. Overall, the Facility will be secured by a debenture over the assets of PeerTV plc. In addition to interest, the Lender will receive warrants exercisable for a period of five years from the date of each drawdown from the facility in an amount equal to 100% of each drawdown. The Company has received an initial £100,000 of the Facility, resulting in the issue of warrants to purchase 41,200,000 Ordinary Shares with an exercise price of 0.25p.

· The Company's subsidiary Digitek SMT Assemblies Ltd has called an extraordinary meeting of its Loan Note holders on 21 October 2014 to approve the modification of the Loan Note Instrument so that the interest due in respect of Q2 and Q3 2014 accrue to the principal of the Loan Notes and to obtain Loan Note holders' permission to raise financing through the sale of purchase orders (POs) received by Digitek with an aggregate value not exceeding £100,000 to sources which could include private investors, funds or lenders associated with the CSS Group of Companies. Furthermore, reflecting the movement in the Company's share price the number of warrants to acquire PeerTV plc Ordinary Shares issued on each £10,000 Loan Notes has been increased to 125,000 for six month maturity and 250,000 for twelve month maturity.

Outlook

· The global Over the Top ("OTT") Video market, in which PeerTV operates is growing strongly. According to a recent report by Digital TV Research OTT video services will be available in 706.5 million TV homes worldwide by 2020, nearly double the 374.4 million homes expected in 2014.

· We believe that the conditional order received from our main customer illustrates the strength of our technology and the competitive lead that has been established. The challenge is to exploit that lead by enabling our PeerTV products to be accessible to new customers with much reduced customization required.

· On the Digitek side, we are focusing on attracting accounts from sectors such as military and medical devices which offer higher margins but also demand higher standards. The new SMT line is an important part of this strategy and we have indication from some potential customers of their intention to work with Digitek once the line is in place.

· The Group will continue to require investment to provide the working capital necessary to support the expansion of both business units.

Further enquiries:

PeerTV Plc

Ossie Weitzman, Chief Financial Officer

Tel: +972 974 07315 Ext.0

Daniel Stewart & Company (Nomad and Broker)

Emma Earl / David Coffman

Tel: +44 (0)20 7776 6550

CONDENSED GROUP INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2014

CONDENSED GROUP BALANCE SHEET

FOR THE SIX MONTHS ENDED 30 JUNE 2014

CONDENSED GROUP CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2014

NOTES TO THE REPORT AND CONDENSED GROUP FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2014

1. BASIS OF PREPARATION

The condensed group financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) as endorsed for use by Companies listed on an EU regulated market and in accordance with IAS34 - "Interim Financial Reporting". The same accounting policies, presentation and methods of computation have been followed in the preparation of these results as were applied in the Group's latest annual audited financial statements. It is not expected that there will be any changes or additions to these in the 2013 annual financial statements.

This statement does not comprise statutory accounts as defined in Section 434 of the Companies Act 2006 and the results for the six months ended 30 June 2014 and for the six months ended 30 June 2013 are unaudited.

The financial information for the year ended 31 December 2013 is an extract from the latest group accounts. Statutory financial statements for the year ended 31 December 2013, prepared in accordance with IFRS, on which the auditors gave an unmodified opinion but did include reference to matters to which the auditors drew attention by way of emphasis without modifying their report.

The condensed group financial statements are presented in US Dollars and all values are rounded to the nearest thousand dollars ($'000) except when otherwise indicated.

During the six month period ended 30 June 2014 the group incurred a loss of $2,025,000 and had net liabilities of $6,699,000 as at that date.

Subject to the group's ability to raise required funds, the directors consider that it is appropriate to prepare the financial statements on the going concern basis. If additional financing by whatever means is not secured in the next twelve statutory months, then it is unlikely that the group be able to continue in its present form.

2. RAISING OF CAPITAL

During the period the company issued shares as follows:

In January 2014 the company issued a private placement memorandum pursuant to which gross investment of £300,500 was received. 30,050,000 Ordinary Shares were issued at a price of 1p per share together with an equal number of warrants exercisable at 1.5 p each.

In April 2014 the company issued a private placement memorandum pursuant to which it received by 30 June 2014 gross investment of £266,300 was received. 26,630,000 Ordinary Shares were issued at a price of 1p per share together with an equal number of warrants exercisable at 1.5 p each.

In June 2014 under terms agreed with the holders of the PeerTV plc 8% Loan Notes in December 2013, Loan Notes to the value of £450,280 were converted to equity at a price of 1.047 p per Ordinary Share being at an agreed discount to the average price at which the company raised the same amount from investors during the quarter ended 31 March 2014.

In addition to the above, during the six months ended 30 June 2014 the Company issued a total of 53,575,093 Ordinary Shares at an average price of 1.2 p each in lieu of interest and loan repayments, exercise of options and settlements with certain creditors.

During the period the company's subsidiary Digitek SMT Assemblies Limited raised £130,000 in secured loan notes and made payments totalling £107,700 to loan note holders requesting redemption.

3. BUSINESS SEGMENT ANALYSIS

Class of business

The turnover, loss on ordinary activities before taxation and net liabilities of the group are attributable to two classes of business.

PeerTV Ltd is engaged in developing and providing hardware and software to enable the delivery of live broadcasts and video on demand over the internet to the television. The company develops, manufactures and supplies end-to-end technology systems for a new breed of TV operator that seeks to deliver rich, personalized and highly cost-effective internet TV services.

Through its wholly owned subsidiary SM Digitek (1993) Ltd, Digitek Holdings Ltd's principal activities are the assembly of electronic products and components and the associated sourcing and logistics for companies principally engaged in the hi-tech and telecommunications industries in Israel. It uses electronic and computerized equipment, which operates robotically and is geared to the accurate assembly of the electronic components on the circuit board in the least possible time.

4. LOSS PER SHARE

Basic loss per share is calculated by reference to the loss on ordinary activities after taxation of $2,025,000 (30 June 2013- loss of $1,101,000 and 31 December 2013 - loss of $3,048,000) and on the weighted average of 166,851,497 (30 June 2013 - 59,683,350 and 31 December 2013 - 79,081,357) shares in issue. The calculation of diluted earnings per share is based on the loss on ordinary activities after taxation and the diluted weighted average of 183,075,160 (30 June 2013 - 73,558,939 and 31 December 2013 - 94,164,029) shares calculated as follows:

In July 2014 the Company raised £210,000 before expenses through a placing of 42,000,000 new ordinary shares of 0.5 pence each at a price of 0.5 pence per share. In addition the Company announced that it had entered into an agreement with YA Global Master SPV Ltd ("YA"), an investment fund managed by Yorkville Advisors Global under which YA will provide an equity facility of up to £1.5 million under the terms of a Standby Equity Distribution Agreement ("SEDA"). 6,400,000 Ordinary Shares were issued at a price of 0.625p to satisfy various costs which became due on signing the agreement.

In August 2014 the company issued 5,000,000 new ordinary shares of 0.5p each in lieu of part repayment of a loan due by the company's subsidiary SM Digitek (1993) Limited at a price of 0.5p per share and a further 10,000,000 Ordinary Shares at a price of 0.5p each in part repayment of loans due by the company's subsidiary PeerTV Limited. It also issued 6,950,000 new Ordinary Shares at a price of 0.5p in lieu of part repayment of certain fees and expenses.

In September 2014 an Extraordinary General Meeting was held at which it was agreed that the Company reorganise its share capital such that its existing Ordinary Shares have a lower nominal value. This was achieved by a subdivision of each existing Ordinary Share into one ordinary share of 0.05 pence each and one subordinated share of 0.45 pence each. This action had become necessary since the price at which the Company's ordinary shares traded on AIM had recently fallen below the nominal value of such ordinary shares, preventing the issue of any further shares.

Also in September 2014 it was announced that the company had signed an agreement in respect of a £200,000 revolving line of credit with CSS Alpha (BVI) Ltd comprising Debtor Financing and Purchase Order Financing. Overall, the Facility will be secured by a debenture over the assets of PeerTV plc. In addition to interest, the Lender will receive warrants exercisable for a period of five years from the date of each drawdown from the facility in an amount equal to 100% of each drawdown. The exercise price of the warrants shall be equal to the average of the mid-market price of the shares of the Company for the five days preceding the date of each drawdown. On signing the agreement the Company received an initial £100,000 of the Facility, resulting in the issue of warrants to purchase 41,200,000 Ordinary Shares with an exercise price of 0.25p.